Gold Up On Fed Jitters and Brexit As Equities And Oil Falter

There’s always at least one in every crowd that cuts across the grain. Today, we have a number of equities traders across the globe who are concerned the Fed is going to surprise markets.

Yawn… and if the Fed does surprise? U.S. rates go to 0.75, scarcely a game changer. Never mind, though, because it won’t be happening.

If you think the Fed has weighty interest-rate questions on its mind, think about the Russians. They’ve just lowered their interest rate to 10.5% from 11.00%. Break out the cowbells and vodka, everyone.

Equities around the world were down today, with U.S. stocks faring best. Europe was down the most of all regions on growth fears, near-zero German bund yields, and the big unresolved risk event – the Brexit vote, which come on June 23rd.

A poll released after trading hours on the other side of the pond shows that Brits are foolishly going to vote for an exit from certain EU commitments.

The DAX was off 2.50%, while in Paris the CAC was down 2.25%. The London FTSE was hurt today but less than either German or French bourses.

Mario Draghi, head of the European Central Bank, warned of an undershoot on inflation targets and seemed to be saying that more inflation is better than too little, a stance with which we agree. He also warned of long-term consequences to output and productivity, and the underutilization of Europe vast pool of talent.

No one in the western world do leaders want to make the mega infrastructure investments needed to catapult the leading technological countries to the next big phase. Now if there were a war, the money would be “found.” But for a peaceful advance? No way.

West Teas Intermediate fell 3.00% and Brent North Sea fell around 2.80% as a stronger dollar and a slight rise in U.S. rig counts weighed.

Saboteurs in Nigeria have seen to it that prices did not fall too far, blowing up another pipeline as officials of that country said explicitly they could not control the “Niger Valley Avengers.”

Nevertheless, Brent and WTI remained on track for weekly gains, although much diminished.

Gold prospered from the various cross currents present in the market as investors looked for a smart haven play heading into the weekend. Silver was up again, as well.

Both metals rose even in the face of the stronger dollar. At 3:30 in New York, gold is up $6.00 per ounce. Silver has risen 5 cents per ounce.

Elsewhere in haven land, the yield on the U.S. 10-year bond fell yet again. They yen waffled between the green and red zones all day but looks to finish up around 0.33%. The Swiss franc also showed indecision and is on track to finish even on the day.

The British pound is of 1.30%, an indication of what is to come.

Quietly for now, volatility has been creeping up as measured by the VIX in Chicago (CBOE). It has risen from about 13.50 to 17.20 just this week. This is so, even as the CME is showing a steady probability reading of under 2.00% for an interest rate hike come next Wednesday when the FOMC meets.

Summer weekend-itis is figuring into a lot of investors’ trading calculus. The crowds are filling up the Hamptons and the Cape Islands on the East Coast of the U.S.

The Brits? They’re probably headed for the nearest pub.

Wishing you as always, good trading,